While the five million, beat Apple’s four million iPhone 4S sales, it still came under the most bullish analyst expectations. Analysts appear to be in agreement on one thing, Apple missed expectations because its supply of iPhone 5 didn’t meet demand.

Apple share price fell 1.3 percent to $690.79 at close yesterday, following the news that it had only sold five million iPhone 5 units in three days.

Apple has confirmed that it sold five million iPhone 5 smartphones in the first three days after the launch on Friday 21 September, which meant the company is already half way to selling the 10 million iPhone 5 models that Piper Jaffray analyst Gene Munster expects Apple to sell before the end of September, but this hasn’t stopped analysts from complaining that Apple has missed targets, and some investors have pulled out of the stock, causing the value to decline $10. The stock had closed at $700.09 the day before.

And yet, despite the negativity, there are still high hopes that Apple’s iPhone will buoy the weak US economy this autumn. A USA Today report notes: “U.S. sales of Apple's latest must-have gadget could pump more than $3 billion into the economy by year's end, say some economists and technology analysts.”

Analysts expectations and reactions to iPhone 5

While the five million, beat Apple’s four million iPhone 4S sales, it still came under the most bullish analyst expectations. Analysts appear to be in agreement on one thing, Apple missed expectations because its supply of iPhone 5 didn’t meet demand.

Barclays Capital analyst Ben Reitzes suggested that the demand for the iPhone 5 was there, but Apple couldn’t keep up with supply. He wrote: “While our weekend checks suggested very robust demand, we witnessed very limited supply.”

“We believe Apple is struggling to keep up with demand and guidance on new shipments remains vague or non-existent,” added Reitzes.

Reitzes suggests that Apple had “significant production constraints” for the new iPhone due to its use of a new display technology, known as in-cell. There had been warning about possible production delays with in-cell, notes Barrons.

Reitzes suggested that supplies may be less constrained in the next financial quarter: “Our Asia team believes Apple has improved the sensitivity of its in-cell screens via a firmware update. As a result the visibility for iPhone 5 has improved and we believe there is less downside risk to production numbers going forward. Estimates for iPhone 5 display supply are for only about 10 million screens for C3Q12, with a significant ramp to start C4Q12.”

Topeka Capital Markets analyst Brian White (who had estimated weekend sales of 6 million to 6.5 million units) told Bloomberg: “The number is lower than what people had expected. This seems to be driven more by availability than demand.”

ISI Group analyst Brian Marshall (who had anticipated sales of 6 million to 8 million units) told clients that Apple’s figure doesn’t include online orders that customers have not received. “Units in transit could be in the millions currently,” Marshall said. He said his estimates were based on an understanding that Apple would count pre-order sales.

Piper Jaffray analyst Gene Munster believes that once supply constraints ease Apple will be able to match the expectations. He noted that Apple hasn’t included all pre-orders in the five million figure.

Of the additional pre-orders that Apple didn’t include, Munster wrote: “We believe that this may have been up to 1 million additional units as units pre-ordered after the middle of the first day were projected to be available in October.”

Munster added: “Our 8 million estimate assumed full weekend availability and the counting of all online pre-orders.”

BMO Capital Markets analyst Keith Bachman (who had estimated six to eight million sales) called the five million sales a “disappointment”. Like other analysts, Backman blamed supply: “We believe iPhone 5 supply is the issue, not demand,” he wrote.

Sterne Agee analyst Shaw Wu (who estimated 4 million to 5 million sales) wasn’t “overly concerned” about the news. He noted that five million is “Still a big number” and wrote that he believes that the reaction “Is more a matter of high expectations getting out of touch with reality.”

“We find it unfortunate that some analysts continue to publish irresponsible estimates without taking into account realistic demand trends and potential supply constraints on new in-cell touchscreens,” he wrote. Wu expects Apple to sell 27 million iPhones in the September quarter and 46.5 million units in the December quarter.

JP Morgan analyst Mark Moskowitz confirmed a that a conversation with investor relations at Apple had revealed that the pre-orders that have not yet shipped of the iPhone 5 were not include in the 5 million-plus figure the company released, notes Barrons.

The negative news has caused some concern in the investor community, however. Marketwatch has published five reasons to sell Apple shares, among the reasons they note the absence of late Apple CEO Steve Jobs and his ability to persuade people that Apple products are “magical” and “Economic headwinds”, specifically the fact that markets that Apple operates in are “saturated”.

Investors may want to wait until Apple announces the results of its fiscal fourth quarter on 23 October. Apple’s fourth quarter ends on 30 September. Analysts polled by Bloomberg expect the company to report profit of $8.35 billion on sales of $36.1 billion, according to the average of analysts’ estimates.